Could Toys ‘R’ Us Make a Comeback?
Toys “R” Us, the beloved toy retailer, was acquired last week by WHP Global, a brand management company. CNN reports that the assets included the Toys “R” Us, Babies “R” Us, Geoffrey the Giraffe and Imaginarium brand marks as well as existing stores in Europe, Asia and Latin America. The brands had been held by Tru Kids, which bought them in a liquidation sale in 2019.
The CEO of Tru Kids is Richard Barry, former chief merchandising officer of Toys “R” Us. Toys “R” Us had been owned by a private equity firm that saddled it with $5 billion in debt (and $400 million in annual interest charges) at a time when retail sales were undergoing dramatic change. In addition to stores outside the United States, Tru Kids dipped its toes in the American market through a partnership with Kroger (NYSE: KR) for holiday pop-ups under the Geoffrey’s Toybox name, small physical locations in Texas and New Jersey, and the Toys “R” Us Adventure, an immersive playground pop-up that operated in Chicago and Atlanta.
The terms of the deal were not disclosed. WHP has $3 billion in annual sales from its portfolio of retail brands worldwide.
Toy demand has been strong due to the pandemic, as people look for ways to stay entertained in lockdown. While birthrates are falling in the United States, they are steady in many countries. Also, video games, board games and collectible toys appeal to a broad age range. People want to be Toys “R” Us adults! If the business is operated with less leverage, it could well be a winner again.
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